Apple Inc. Facing Accusations Over Illegal Irish Tax Deals

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Apple Inc. (NASDAQ:AAPL) will reportedly be accused by the European Commission of illicitly gaining from state assistance in Ireland. The allegations are based on the preliminary findings on an investigation into several tax deals. A report from the Financial Times suggests that the investigation could end up forcing the company to pay billions of euros in fine. There was no comment from Apple about the issue.

Apple deals under scrutiny

Based on first-hand investigations by the European Commission over the Apple tax deal in the Ireland, the company drew benefit from state aid after making illegal deals with Irish authorities, according to the report in Financial Times.

The European Commission is set to report its initial decision in the Apple Inc. (NASDAQ:AAPL) case on Monday, where it will reveal details in its the decision that two tax deals between the U.S. company and Irish government in 1991 and 2007 involved illegal state aid. Apple Inc. (NASDAQ:AAPL) will be given 30 days to respond. The commission is weighing the tax deal in the purview of regional state aid rules, which suggests that the company might be ordered to return any unpaid taxes. However, there is no clarity over how this fine would be paid.

Countries such as Ireland, the Netherlands and Luxembourg have a defined, limited corporate tax structure. In most of the countries, the effective corporate tax rate is close to or lower than the nominal rate

More countries to be covered

The European Commission is also probing into various tax related deals in the Netherlands and Luxembourg, as well as Ireland revealing the tax-planning practices of big companies such as Apple, Google and Starbucks. Last year, a U.S. Senate committee investigation revealed that Apple has managed to reduce billions from its tax liabilities by declaring companies registered in the Irish city of Cork as not tax resident in any country.

With this case, the commission is hoping to throw light on the illegal sweeteners that are being given to multinational companies in various European countries. EU competition chief Joaquín Almunia said that the investigation might extend to other states, and is presently covering Ireland, Luxembourg, the Netherlands, Belgium and the British territory of Gibraltar.

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